Perhaps it was just a case of bad timing.
Last Tuesday, Andrew Ross Sorkin, lead M&A reporter at The New York Times, and Dennis Berman, his counterpart at The Wall Street Journal, both devoted their columns to the same less-than-insightful insight: that in dealmaking, timing is everything. Essentially, deals done early in the merger cycle do better than those done later, they each concluded. Really? You don't say! What will these guys tackle next? That riskier deals can yield higher rewards?
Forgive the snarkiness. It's just that by virtue of the outlets they write for, Sorkin and Berman are arguably the country's pre-eminent M&A journalists, complete with their own regularly scheduled newspaper columns and expanding online empires, DealBook and Deal Journal, respectively. So perhaps we were hoping for a little more analytical rigor and less trafficking in the obvious. Still, the "timing is everything" columns are worth dissecting not so much for what they tell us about the M&A business, but about the strange state of deal journalism today, specifically at The New York Times.
Berman, whose piece is the more narrow of the two, limits his musings to private equity buyouts. The PE heroes of the story (or villains, depending on your point of view) are the buyout firms that bought Yellow Pages publisher Dex Media Inc. in 2002, cashed in part of their stake through an initial public offering in 2004, and then merged the company with R.H. Donnelley & Sons Co. in 2006, pocketing $2.6 billion along the way. Berman notes that in the past 12 months, however, Donnelley shares have tanked, largely because the Internet is making phone books obsolete.
Berman's conclusion: Good thing those PE guys got out when they did! See? Timing is everything. Voilà.
Sorkin's piece, meanwhile, is much more opinionated than Berman's. Based on a new study published in the Academy of Management Journal, it reveals that deals done in the beginning of a merger cycle typically succeed, while those done later fall flat. Of course, anybody who has lived through any bubble -- tulip, Internet, housing -- knows this to be true; early movers fare best. But Sorkin uses this truism to admonish his CEO readers to "stop being such scaredy-cats" and go out and make some deals:
"The problem is that most CEOs don't have the guts to make acquisitions when everyone is running scared," Sorkin writes. "That is usually during a volatile market -- like the one we're living in now. Which is exactly the wrong approach."
Maybe for Sorkin it is -- after all, who wants to cover M&A when there aren't a lot of deals? But what about some of his colleagues at The New York Times' business section? Do they think CEOs should get out there and start dealmaking?
We're thinking, of course, of Gretchen Morgenson, who has been waging a jihad against mergers in the pages of the Times for years. (Who can forget her classic jeremiad, "What Are Mergers Good For?", in The New York Times Magazine in 2005?) Morgenson's imposing shadow looms over Sorkin's column from the get-go, when he sets up a straw man by declaring "Most mergers fail. If that's not a bona fide fact, plenty of smart people think it is" and then goes on to list some of those "smart people" -- McKinsey, Harvard, Booz Allen, etc., etc.
But where is Gretchen on that list? Where is the Times itself? Where, for that matter, is most of the media, which during the last merger boom turned decidedly and reflexively hostile toward deals -- a hostility fueled by hedge funds, activist shareholders and governance gurus well schooled in the art of spin?
Indeed, these days, it's not that hard to understand that CEOs would be "scaredy-cats" when it comes to making deals. Announce one that, say, looks too expensive if you're the buyer, too cheap if you're the seller, includes a golden parachute, results in layoffs, involves a union -- the list goes on and on -- and you can become an object of scorn faster than you can say AOL Time Warner.
You might even end up on the front page of The New York Times or at least the target of a Morgenson column. And if you do, you're going to need a much stronger defense than "timing is everything."
Yvette Kantrow is executive editor of The Deal.